USD subdued as focus shifts to US Presidential debate

It was a relatively subdued trading session on Monday as investors were cautious ahead of a debate between US presidential candidates Hillary Clinton and Donald Trump. The first of three televised debates will take place at 9pm Eastern Time later today in the US.
The slight risk aversion in the currency markets resulted in the yen being the best performer among major currencies.

The dollar traded a range of 100.70 – 101.06 yen in Asia. Meanwhile there was cautious trading in the yen ahead of a speech by Bank of Japan Governor Haruhiko Kuroda today in Osaka. The speech comes after the BoJ held a meeting last week and announced an overhaul to its monetary policy.

Another central banker speaking today will be European Central Bank President Mario Draghi who will be addressing lawmakers in the European Parliament. There was little movement in the euro against the dollar in Asian trading, as the pair traded between $1.1221 and $1.1241.

Swiss National Bank Chairman Thomas Jordan and Dallas Fed Chief Robert Kaplan and Fed Governor Daniel Tarullo are also due to speak today.

In other currencies, sterling bounced further away from Friday’s five week low of $1.2914 to reach an Asian session high of $1.2986. The British currency is being weighed down by Brexit concerns.

Oil prices are in focus this week as an informal OPEC meeting is taking place in Algiers. On Friday, oil prices tumbled nearly 4%, knocking down market sentiment. WTI oil futures recouped some losses and moved off Friday’s low of $44.21 a barrel to reach $44.93 in Monday’s Asian trade. Brent crude was up as well to touch a high of $46.32 a barrel from Friday’s low of $45.63 a barrel.

There were reports over the weekend that Algeria’s energy minister Noureddine Bouterfa said that all options were possible for a production freeze at the upcoming meeting of oil producers this week. Saudi Arabia offered to cut its production levels if Iran agreed as well. The OPEC meeting ends on September 28. The outcome is critical for the direction of oil prices going forward.

Data to watch out for today include the German Ifo business climate report and US new home sales figures. The speeches from BoJ Governor and ECB President Mario Draghi will also be closely watched, as well as the Clinton-Trump debate.